PENNSYLVANIA GAMING CONTROL BOARD
[58 PA. CODE CHS. 423 AND 441]
Temporary Regulations; Applications and Slot Machine Licenses
[36 Pa.B. 681] Under the Pennsylvania Gaming Control Board's (Board) Resolution No. 2005-3 REG, entitled Adoption of Temporary Regulations, dated June 16, 2005, and Resolution No. 2005-4, entitled Adopting of Draft Regulations as Temporary Regulations for the General Licensing Standards for Slot Machine License Applicants Temporary Regulations, dated July 21, 2005, the Board has the authority to amend the temporary regulations, adopted on June 16, 2005, and July 21, 2005, as it deems necessary in accordance with the purpose of the act of July 5, 2004 (P. L. 572, No. 71) (Act 71) and to further the intent of Act 71. Therefore, the Board has decided to make editorial changes to the temporary regulations, dated June 16, 2005, and July 21, 2005, as deposited with the Legislative Reference Bureau (Bureau) and published at 35 Pa.B. 4045 (July 15, 2005) and at 35 Pa.B. 4828 (August 6, 2005).
Therefore, the Board has deposited with the Bureau amendments to 58 Pa. Code §§ 423.4 and 441.10--441.12. The amendments are effective as of January 19, 2006.
The temporary regulations of the Board, 58 Pa. Code Chapters 423 and 441, are amended by amending §§ 423.4, 441.10--441.12 to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.
Order
The Board, acting under the authorizing statute, orders that:
(a) The Board acting under the authority of the Act 71, adopts the amendments to the temporary regulations, adopted by resolution at the January 19, 2006, public meeting. The amendments to the temporary regulations pertain to definitions and the bond or letter of credit requirements.
(b) The following temporary regulations of the Board, 58 Pa. Code, are amended: §§ 423.4 and 441.10--441.12, to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.
(c) These amendments are effective on January 19, 2006, but apply retroactively to July 21, 2005.
(d) The amendments to the temporary regulations shall be posted in their entirety on the Board's website at www.pgcb.state.pa.us and in the Pennsylvania Bulletin.
(e) The Chairperson of the Board shall certify the preceding order and deposit the regulations with the Bureau as required by law.
THOMAS A. DECKER,
ChairpersonFiscal Note: 125-12. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 58. RECREATION
PART VII. GAMING CONTROL BOARD
Subpart B. LICENSING, REGISTERING, CERTIFYING AND PERMITTING
CHAPTER 423. APPLICATIONS § 423.4. Incomplete applications.
* * * * * (c) Refusal to provide information as required in subsection (a)(1) or (2) may result in the immediate denial of the application.
(d) Failure to provide documentation as required by section 1313(c) of the act (relating to slot machine license application financial fitness requirements) will result in the immediate denial of the application.
Subpart C. SLOT MACHINE LICENSING
CHAPTER 441. SLOT MACHINE LICENSES § 441.10. License fee payment bond or letter of credit requirements.
(a) Except as otherwise provided in § 443.3 (relating to Conditional category 1 licenses), an application for a slot machine license shall at all times throughout the period in which the application is on file with the Board include original payment bonds or original irrevocable letters of credit, or some combination thereof, that include draw instructions guaranteeing the applicant's payment of the slot machine license fee required by section 1209(c) of the act (relating to slot machine license fee) if the license is approved and issued.
(1) All payment bonds or irrevocable letters of credit shall be submitted and approved by the Board before an application may be deemed complete. The Board's review will include an assessment of both the proposed terms of the payment bond or irrevocable letter of credit and of the surety or financial institution that will issue the payment bond or irrevocable letter of credit. An application will be deemed incomplete if at any time during the period the application is on file with the Board payment bonds or letters of credit approved by the Board in the amounts required in paragraph (2) are not in full force and effect.
(2) Payment bonds or irrevocable letters of credit must aggregate to the following amounts:
(i) $50,000,000 for each application for a Category 1 or Category 2 license.
(ii) $5,000,000 for each application for a Category 3 license.
(3) It is not necessary for an applicant who has posted original payment bonds or original irrevocable letters of credit, or some combination thereof under § 443.3, to post additional payment bonds or letters of credit in connection with its application for a Category 1 license if the application involves the same applicant at the same licensed facility.
(b) Unless otherwise required by the Board, a payment bond provided under this section must be issued by a surety company that is both licensed by the Insurance Department and assigned a credit rating within the three highest categories, without regard to numerics or other modifiers, by Moody's or Standard & Poor's, or upon the discontinuance of Moody's or Standard & Poor's, by another Nationally recognized rating service. Proof that the surety is licensed by the Insurance Department and has been assigned the required credit rating must accompany any payment bond submitted under this section.
(c) Unless otherwise required by the Board, a letter of credit must be issued by a bank, trust company, National banking association or corporation which is both subject to regulation by the Federal Reserve System under the Bank Holding Company Act of 1956 (12 U.S.C.A. §§ 1841--1849) and assigned a credit rating within the three highest rating categories, without regard to numerics or other modifiers, by Moody's or Standard & Poor's, or upon the discontinuance of Moody's or Standard & Poor's, by another Nationally recognized rating service. Proof that the bank, trust company, National banking association or corporation is subject to regulation by the Federal Reserve System under the Bank Holding Company Act of 1956 (12 U.S.C.A. §§ 1841--1849) and that the issuer has been assigned the required credit rating must accompany any letter of credit submitted under this section.
(d) The payment bond or irrevocable letter of credit provided under this section must state that it is payable to ''The Commonwealth of Pennsylvania'' as the obligee.
(e) The payment bond or irrevocable letter of credit provided under this section must provide that if the slot machine license has been approved and issued by the Board and the license fee has not been paid in full within 5 business days following the issuance of the license, the Commonwealth will have the right to request immediate payment under the payment bond or irrevocable letter of credit for payment of the slot machine license fee.
(f) The payment bond or irrevocable letter of credit provided under this section must state that it will expire upon the earlier to occur of the following:
(1) A specified expiry date or any automatically extended expiry date.
(2) Receipt by the issuer of the Board's signed statement that:
(i) The application has been denied.
(ii) The slot machine license has been issued and 10 business days have elapsed following the issuance of the license.
(iii) The license fee has been paid.
(iv) The applicant has been permitted by the Board to withdraw its application under § 423.5 (relating to application withdrawal).
(g) Any expiry date applicable to a payment bond or letter of credit provided under this section must be at least 12 months from the date of issuance of the payment bond or letter or credit. Any provision automatically renewing or extending a payment bond or letter of credit must do so at intervals of at least 3 months. Any notice provisions to the Board in a payment bond or letter of credit applicable to an election by an issuer not to renew or extend a then current expiry date must provide that the Board will receive at least 60 days written notice, by registered mail or overnight courier service, of an election not to renew or extend.
(h) This section does not preclude a slot machine license applicant from substituting or replacing a payment bond or letter of credit during the period the application is on file with the Board provided the replacement payment bond or letter of credit is approved by the Board under to this section.
§ 441.11. Slot machine license issuance bond requirement.
(a) Upon the issuance of a slot machine license, a licensed gaming entity shall post an original payment bond in the amount of $1,000,000.
(b) Unless otherwise required by the Board, the payment bond must comply with the following:
(1) The payment bond must be issued by a surety company that is both licensed by the Insurance Department and assigned a credit rating within the three highest categories, without regard to numerics or other modifiers, by Moody's or Standard & Poor's, or upon the discontinuance of Moody's or Standard & Poor's, by another Nationally recognized rating service. Proof that the surety is licensed by the Insurance Department and has been assigned the required credit rating must accompany any payment bond submitted under this section.
(2) A licensed gaming entity shall submit its proposed payment bond to the Board prior to the issuance of a slot machine license. The Board will investigate and approve both the proposed terms of the payment bond and the surety that will issue the payment bond.
(3) The payment bond must state that it is payable to ''The Commonwealth of Pennsylvania'' as the obligee for immediate payment of the licensed gaming entity's financial obligations to the Commonwealth under the act and as security to guarantee that the licensed gaming entity faithfully makes the payments, keeps its books and records, makes reports and conducts its operations in conformity with the act, this part and the rules and orders promulgated by the Board.
(4) A payment bond issued in accordance with this section will remain in full force and effect throughout the period of time that the slot machine license is in effect. If a bond is canceled and the slot machine licensee fails to file a new bond with the Board in the required amount on or before the effective date of the cancellation, the licensee's license will be revoked or suspended.
(5) Any notice provision to the Board in a payment bond applicable to an election by a surety to cancel a then current payment bond must provide that the Board will receive at least 30 days written notice, by registered mail or overnight courier service, of the surety's election to cancel.
(c) The Board may demand that the licensed gaming entity post a new payment bond upon the occurrence of any of the following:
(1) Liability on the existing payment bond is discharged or reduced by judgment rendered, payment made or similar occurrence.
(2) The Board determines that the surety is no longer satisfactory.
(3) The licensed gaming entity requests the right to post a new payment bond.
(4) The Board receives notice that the payment bond will be cancelled.
§ 441.12. Public input.
(a) If the Board determines that there is substantial public interest in a slot machine licensing proceeding, it may conduct a public hearing in the region where the proposed facility is to be located.
(b) The Board will develop and publish a protocol establishing the procedure to be used in the conduct of a public hearing under this section.
[Pa.B. Doc. No. 06-213. Filed for public inspection February 3, 2006, 9:00 a.m.]
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